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Take your old property tax rate to a new house
April 21, 2002
One of the main reasons that California voters passed Proposition 13 in June
1978 was to protect themselves against escalating property taxes as the value of
their property increased. By establishing base year values that could not go up
by more than 2 percent per year, Proposition 13 kept the owner's property tax
increase at a manageable level.
Unless there was a change of ownership or new construction, their base year
value would not change. One unintended effect of Proposition 13 was to
discourage people from changing their residence as their family circumstances
evolved.
Here is an example:
Fred, 56, and Nelda, 53, wish to sell their four bedroom home on a large lot now
that their children are grown and have homes of their own. They have lived in
their current home for many years and the 1975 Proposition 13 base year value of
$40,000 has only grown to $59,000 by 1996. Their property tax bill is
approximately $600 per year. Their home today is worth $195,000.
Fred and Nelda have found a townhouse with two bedrooms and no yard for $159,000
but they are unwilling to make the move because under Proposition 13 this change
of ownership will establish a new base year value for the townhouse based
primarily on their purchase price and their tax bill will jump from $600 to
approximately $1,600 per year. They are on a fixed income and cannot afford the
additional $1,000 per year in taxes.
To solve this problem California voters passed Proposition 60 in November 1986,
permitting people over 55 years of age to sell one home and buy another of equal
or lesser value in the same county within two years and take their original
Proposition 13 base year value with them. In the example above, Fred and Nelda
could move to the townhouse and still pay $600 per year in property taxes (their
total bill may be larger or smaller, however, depending on the tax rate and fees
charged at the new residence) plus future increases not to exceed 2 percent.
Only one of the owners has to be over 55 on the date the original house is sold.
Depending on the timing of the transactions, equal or lesser value can mean up
to 112 percent of the sale price of the original residence.
To qualify for this program Fred and Nelda must file a Claim for Base Year Value
Transfer with our office when they have made their move. This office will then
issue a supplemental assessment notice that will transfer their base year value
to the new residence. The lower base year value cannot be transferred until the
original home is sold; so if the replacement home is purchased first, there may
be a period when they will have to pay the higher tax. If the new residence had
a higher base year value than the home they sold, they will receive a refund
check to help them pay the higher taxes until the next full tax year when their
former base year value will appear on the regular bill.
Adjustments can be made to the transfer if the original home had additional uses
such as a vineyard or multiple dwelling units so that the comparison between the
original and replacement home values is fair. The over-55 base year transfer can
be used only once in a person's lifetime.
Note: Homeowners over 55 who have owned a vacant lot in the same county for many
years and wish to transfer their base year value to a new home that they build
on that lot may now do so under a recent state ruling. The full cash value of
the newly constructed home plus the full cash value of the lot as of the date of
completion of the new home must be equal to or less than the sales price of
their original residence and the new home must be completed within two years of
the date of sale of the original residence.
Should you have any questions please contact Napa County Assessor John Tuteur at
253-4459 or by e-mail at jtuteur@co.napa.ca.us.
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